Blog » MRS API

December 24, 2024

Why User Experience Is the New Battleground for Banks

• Digital Banking
• Product
• Transaction Enrichment

6 minutes

Today’s banking customers are less loyal to a single bank. In fact, 58% of respondents across Germany, France, and the UK have accounts with 2 to 3 different banks. Why?  Everyone wants better services and a better banking experience. If one bank fails to deliver, they’re quick to move on to the next.

So, how do you become that go-to bank – the one that not only keeps customers, but gets them to engage with you daily? The answer is simpler than you might think: nail the user experience. It’s not just about offering the latest tech – it’s about making sure your customers’ banking experience is easy, secure, and intuitive.

Building Trust and Loyalty in Digital Banking

Winning in digital banking is all about building trust and loyalty. According to Forrester, banks that continuously improve customer experience (CX) grow 3.2x faster than those that don’t. This isn’t just a millennial demand:

• 86% of Generation X
• 90% of Baby Boomers

…also say digital banking user experience (UX) is important to them. Yet, many banking apps still fall short with poor navigation, inaccurate transaction data, and a lack of personalisation. Loyal customers generate 2.5x higher transaction value.

Why is bad navigation frustrating? It’s time-consuming, confusing, and leads to abandoned tasks. How can good design fix it? Clear information, accurate data, intuitive menus, search functionality. 

As well as, with fraud and data breaches on the rise, security is critical. Customers need to feel confident that their information is protected. When they feel secure and understood, they stick around. Customer frustration = high attrition.

Enriched Data for Better Banking User Experience

Having established the need for a better experience, let’s dive into a key factor that makes it possible: enriched data. With enriched banking data, the end user gets a full view of transactions – not just the merchant name, but the actual logo, spending categories, website, contact details and even the location where the purchase was made. 

_{Displaying the correct merchant name, logo, specific category, eco tags in the banking transaction list}

Let’s have a look at this example: a transaction at “Brüt by Färm.” Instead of a generic “BrutFarm104Brussels” line item, enriched data displays the store’s correct name, logo, and specific category (health food store), even highlighting if the merchant is sustainable. This empowers users with much more financial control and a more positive banking experience. Users can also see more in the detailed transaction view, along with spending insights by category.

_{Example of the detailed transaction view and smart categorisation (spending insights)}

Why is this important? According to Accenture, 91% of millennials prefer brands that offer personalised product recommendations and services.

How does it work? When banks use enriched data, they can analyse user spending patterns and offer tailored spending insights, smart recommendations, budgeting tips, and even travel suggestions. For instance, if a user makes a transaction at the airport, the banking app can trigger suggestions for travel deals or tips, assuming the user is traveling. This level of personalisation makes banking more relevant, convenient, and truly tailored to each individual.

_{This is how personalised recommendations can look like in the banking app}

Key Performance Indicators for Banks

We’ve discussed the importance of enriched data and personalisation. But what’s the real-world impact for banks that prioritise this?

• Customer Retention: Personalisation transforms a generic banking app into a trusted financial partner. By understanding user spending patterns, the app becomes a helpful guide, not just a transaction record. When customers feel valued, retention rates increase.
• Cost Savings: AI and automation streamline operations, helping banks reduce costs. These savings can be reinvested into new features or passed on to customers.
• Lifetime Customer Value (LCV): Enriched data increases LCV by reducing churn and fostering long-term relationships.
• Revenue Growth per User: Offering premium services, as seen with Monzo and Revolut, results in higher revenue per customer.
• Increased Deposits: As customers trust their bank more, deposits naturally grow.
• Cross-Sell Opportunities: Banks can identify new product opportunities by analysing customer data, increasing cross-sell uptake and overall customer value.

These metrics show how data and AI can help banks strengthen relationships and drive growth.

AI and Conversational Banking

Looking ahead to 2025, Forrester predicts that AI-powered chatbots will become much smarter, helping customers navigate apps, get personalised advice, and solve issues in real-time. Instead of navigating menus, a customer could simply ask, ‘What’s my spending in the last 30 days on groceries?’ and get an immediate, accurate answer from a conversational AI bot. The bot could also proactively offer insights like, ‘I see you’re spending more on groceries this month. Would you like to set a new budget?’

However, to make this work, banks need to be strategic. If they mismanage AI design and governance, they risk frustrating customers. When done right, these tools can transform the user experience, making customers feel supported at all times.

Conclusion

The future of banking belongs to those who build trust and understanding. By focusing on these four pillars – AI, enriched data, simplicity, and trust – banks can move beyond being just financial institutions to becoming trusted partners that genuinely help their customers thrive. Exceptional UX is no longer an option, it’s the winning strategy for the digital age.